ISLAMABAD: Finance Minister of Pakistan Muhammad Aurangzeb on Thursday said that Pakistan would clinch a deal with the International Monetary Fund (IMF) this month.
He expressed optimism about the positive progress in negotiations between Islamabad and the global lender to reach a staff-level deal on a new economic programme.
The government is looking to ink the IMF agreement of more than $6 billion after addressing all of the requirements in its annual budget.
“The talks with the IMF are progressing positively,” the finance czar said while briefing the National Assembly’s Standing Committee on Finance.
Aurangzeb informed the parliamentary body that no country could run on a 9 percent tax-to-gross domestic product (GDP) ratio and vowed to raise the ratio to 13 percent. “The Fund requires taxation on the actual income which is fair,” the minister said.
The federal government unveiled the tax-ridden Rs18.877 trillion budget for the fiscal year 2024-25 (FY25) last month, aimed at increasing public revenue and satisfying the IMF, which has repeatedly demanded improvement in tax collection.
The budget aims to raise Rs13 trillion by next July, a roughly 40 percent increase from the current financial year, to bring down the debt burden that has caused the loss of 57 percent of the government revenue.
The tax increases mostly fall on the salaried class, which makes a relatively small part of Pakistan’s mostly informal economy, as well as some retail and export businesses. The budget also threatened strict measures against tax avoiders, including restrictions on gas and electricity access, mobile phones and flying abroad.
The minister in today’s briefing expressed optimism about bringing all the sectors into the tax net, saying that everyone will be made a filer as per the directives of Prime Minister Shehbaz Sharif. He further added that the government will work on increasing people’s trust in the FBR.
He further stated that five federal ministries would be closed, as announced by PM Shehbaz Sharif after the budget 2024-25 presentation last month.
Addressing the standing committee, the minister said all the economic indicators stood positive during the last fiscal year, while the foreign exchange reserves remained well above $9 billion.
Last the Economic Coordination Committee (ECC) of the Cabinet approved major changes to the federal government’s pension system. Pakistan has set a tax revenue target of 13 trillion rupees for the next fiscal year that started on July 1, almost a 40 percent jump from the previous year.
